Author Topic: Help with 1099C and 36 month Rule  (Read 4001 times)

0 Members and 1 Guest are viewing this topic.

jasahj

  • Valued Member
  • Posts: 133
Help with 1099C and 36 month Rule
« on: January 25, 2014 05:27:34 AM »
Hello, Today we received a 1099c for 29,000.  It was an MBNA debt consolidation loan that we had.  Bank of America Purchased it.  August 2007 we stopped paying it.  We have not heard from them in a long time.  Now we have a 1099c.  From what I understand and hope is that the 36 month rule is from last payment.  We are almost at the 6 year SOL for Wisconsin.  Please help. 
Fears are educated into us, and can, if we wish, be educated out.
Karl Augustus Menninger

TomNTex

  • Valued Member
  • Posts: 272
Re: Help with 1099C and 36 month Rule
« Reply #1 on: January 25, 2014 07:08:00 AM »
If you were insovent that year, have a tax person fill out form 928 (I think it is) and be done with it. Otherwise BK is your only other option.

kevinmanheim

  • Valued Member
  • Posts: 11515
Re: Help with 1099C and 36 month Rule
« Reply #2 on: January 25, 2014 12:38:00 PM »
Are you insolvent this year? If so, file IRS Form 982.


Bruno the JDB Killer

  • BANNED
  • Posts: 14304
Re: Help with 1099C and 36 month Rule
« Reply #3 on: January 25, 2014 02:26:39 PM »
The 3 year SOL is for Delaware, which is where BofA is located. Yours is six years. There is a borrowing statute that would allow you to apply the DE SOL, but from what others have posted, it's almost impossible to get a judge to let you use it.
« Last Edit: January 25, 2014 03:35:52 PM by Brunothe JDBKiller »
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

jasahj

  • Valued Member
  • Posts: 133
Re: Help with 1099C and 36 month Rule
« Reply #4 on: January 25, 2014 03:05:44 PM »
I believe we are insolvent.  Back in 2007 when my son was born I was out of work unpaid for an extended time for medical reasons.  We stopped paying all bills to pay rent and car and food bills.  The debt canceled and other debts we owed were  approximately 80,000.  We still owe the money on the 50,000 that has not been canceled but we have not made any payments sine 2007.  Can we still use the entire debt amount to prove insolvent.  I have all the records and credit card statements to prove the debt.  We don't own a house.  Both cars are older.  2005 and 1996.
Fears are educated into us, and can, if we wish, be educated out.
Karl Augustus Menninger

Just Plain Bill

  • Valued Member
  • Posts: 623
Re: Help with 1099C and 36 month Rule
« Reply #5 on: January 25, 2014 03:12:29 PM »
If the total debt is more than you made this year,fill out IRS Form 982 and attach it with this years income tax return.
I Donated

Bruno the JDB Killer

  • BANNED
  • Posts: 14304
Re: Help with 1099C and 36 month Rule
« Reply #6 on: January 25, 2014 03:38:17 PM »
Why not file BK? Then you won't have any tax liabilities.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

Dylan150

  • Valued Member
  • Posts: 42
Re: Help with 1099C and 36 month Rule
« Reply #7 on: January 25, 2014 05:21:27 PM »
Please note that you have to be insolvent as of the day listed on the 1099-c.

duh

  • Valued Member
  • Posts: 1315
Re: Help with 1099C and 36 month Rule
« Reply #8 on: January 25, 2014 08:32:29 PM »
Please note that you have to be insolvent as of the day listed on the 1099-c.

Actually it is the day before the cancelled debt date on the 1099C.

I believe we are insolvent.  Back in 2007 when my son was born I was out of work unpaid for an extended time for medical reasons.  We stopped paying all bills to pay rent and car and food bills.  The debt canceled and other debts we owed were  approximately 80,000.  We still owe the money on the 50,000 that has not been canceled but we have not made any payments sine 2007.  Can we still use the entire debt amount to prove insolvent.  I have all the records and credit card statements to prove the debt.  We don't own a house.  Both cars are older.  2005 and 1996.

Yes.... All debt, including the cancelled debt is to be considered.

You add up all assets, which include clothing , personal items, property, cars, retirement plans... even if you do not have access ... literally every thing you own with an assigned value of what you would get if you sold them... ( garage sale pricing on the clothing etc.) and that gives you an asset amount.

This requires an in depth inventory... which is a pain but needed.

Then you add up everything you owe. Cancelled debt of the 1099C, all other charged off debt, current credit card debt, current debts on anything like medical bills, loans from friends, car loans, amount to pay back to money borrowed on insurance, and even any past due tax, utility, or other bills.... This forms the liability end of things.

Now example... If you have $10,000 in assets but owe ( are in debt for) $14,000 you are $4,000 insolvent

You look at the amount of forgiven debt on the 1099C and if you , for this example, were forgiven less
then the $4,000 then you are insolvent.   BUT  if you were forgiven more then the $4,000 ... lets say,
you were forgiven $5,000 then the $1,000 that is over your insolvency level is what you would include and
pay taxes on.

It is confusing so if you think you are insolvent as of the day before the date on the 1099C then get an a
CPA
I am not an attorney. My posts about my experiences are for entertainment and  possibly educational purposes only.

If you need legal help, you should seek legal counsel.

jasahj

  • Valued Member
  • Posts: 133
Re: Help with 1099C and 36 month Rule
« Reply #9 on: January 25, 2014 09:25:03 PM »
Thank you for the information.  It has helped reassure me a bit.  I loaded the 982 form into Turbo Tax Deluxe and have looked at the numbers.  I used full market price for electronics, good will value for clothes and housewares.  Kelly Blue Book for vehicle private sale amounts.  Less then 10k in 401k so it should be okay.  Possessions are well under the 80,000 in debt amount that we have.
Fears are educated into us, and can, if we wish, be educated out.
Karl Augustus Menninger

mrdoon

  • Valued Member
  • Posts: 184
Re: Help with 1099C and 36 month Rule
« Reply #10 on: February 03, 2014 06:38:10 PM »
Hello, Today we received a 1099c for 29,000.  It was an MBNA debt consolidation loan that we had.  Bank of America Purchased it.  August 2007 we stopped paying it.  We have not heard from them in a long time.  Now we have a 1099c.  From what I understand and hope is that the 36 month rule is from last payment.  We are almost at the 6 year SOL for Wisconsin.  Please help.

A debt's SOL and the issuance of a 1099-C are separate issues.  Based on the info you provided, it's possible that MBNA should have issued the 1099-C in an earlier year but this could be hard to prove.  As others have mentioned, proving that you are/were insolvent may be the easiest way to go.